COOP Mr Cooper Group Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549 

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 23, 2024

 

Mr. Cooper Group Inc.

(Exact Name of Registrant as Specified in Charter) 

 

Delaware	001-14667	91-1653725
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

 

8950 Cypress Waters Blvd.

Coppell, TX 75019

(Address of Principal Executive Offices, and Zip Code)

 

(469) 549-2000

Registrant’s Telephone Number, Including Area Code

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	COOP	The Nasdaq Stock Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On October 23, 2024, Mr. Cooper Group Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 and will be published in the Investors section on the Company’s website at www.mrcoopergroup.com. In connection with the release and the related conference call, the Company posted a presentation relating to its third quarter ended September 30, 2024 financial results in the Investors section on the Company’s website.

 

The press release and presentation include certain non-generally accepted accounting principles financial measures. Reconciliations to the most directly comparable generally accepted accounting principles financial measures are included in the press release and the presentation.

 

The information furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit Number		Exhibit
99.1		Press release of Mr. Cooper Group Inc., dated October 23, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	Mr. Cooper Group Inc.
Date: October 23, 2024	By:	/s/ Kurt Johnson
		Kurt Johnson Executive Vice President & Chief Financial Officer

 

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

MR. COOPER GROUP REPORTS THIRD QUARTER 2024 RESULTS

 

•

Reported net income of $80 million including other mark-to-market of ($126) million, equivalent to ROCE of 6.9% and operating ROTCE of 16.8%

•

Book value per share and tangible book value per share increased to $72.49 and $69.93

•

Servicing portfolio grew 32% y/y to $1,239 billion

•

Repurchased 0.5 million shares of common stock for $46 million

•

Issued $750 million senior notes priced at 6.5%

•

Certified as Great Place to Work for the 6th year in a row

 

Dallas, TX (October 23, 2024) - Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), reported third quarter income before income tax expense of $112 million and net income of $80 million. Excluding other mark-to-market and other adjustments, the Company reported pretax operating income of $246 million. Adjustments included other mark-to-market net of hedges of $126 million and other items shown below in the reconciliation of GAAP and non-GAAP results.

 

Chairman and CEO Jay Bray commented, “We delivered an exceptional quarter, marked by an operating ROTCE of 16.8%, and record liquidity. We are excited to welcome our new team members, with the acquisition of Flagstar’s mortgage operations on target to close, as announced, in the fourth quarter.”

 

Mike Weinbach, President added, “I’m extremely pleased with our strong performance in servicing and exceptional execution in originations, where volumes increased 80% quarter-over-quarter, as our direct-to-consumer channel helped customers take advantage of the rally in mortgage rates during September, while our correspondent channel implemented a number of new initiatives which were well-received by clients.”

 

 

Servicing

The Servicing segment provides a best-in-class home loan experience for our 5.4 million customers while simultaneously strengthening asset performance for investors. In the third quarter, Servicing recorded pre-tax income of $177 million inclusive of other mark-to-market loss of $126 million and pretax operating income of $305 million. The servicing portfolio ended the quarter at $1,239 billion. At quarter end, the carrying value of the MSR was $10,035 million equivalent to 148 bps of MSR UPB.

 

		Quarter Ended
($ in millions)		Q3'24								Q2'24
		$				BPS				$				BPS
Operational revenue		$	616				20.1			$	604				20.7
Amortization, net of accretion			(235	)			(7.6	)			(217	)			(7.4	)
Mark-to-market			(125	)			(4.1	)			69				2.3
Total revenues			256				8.4				456				15.6
Total expenses			(180	)			(5.9	)			(171	)			(5.9	)
Total other income, net			101				3.3				69				2.4
Income before taxes			177				5.8				354				12.1
Other mark-to-market			126				4.1				(68	)			(2.4	)
Accounting items			-				-				-				-
Intangible amortization			2				0.1				2				0.1
Pretax operating income excluding other mark-to-market and accounting items		$	305				10.0			$	288				9.8

 

		Quarter Ended
			Q3'24				Q2'24
MSRs UPB ($B)		$	678			$	676
Subservicing and Other UPB ($B)			561				530
Ending UPB ($B)		$	1,239			$	1,206
Average UPB ($B)		$	1,225			$	1,171
60+ day delinquency rate at period end			1.5	%			1.4	%
Annualized CPR			7.1	%			5.6	%
Modifications and workouts			21,817				22,645

 

Originations

The Originations segment creates servicing assets at attractive margins by acquiring loans through the correspondent channel and refinancing existing loans through the direct-to-consumer channel. Originations earned pretax income and pretax operating income of $69 million.

 

The Company funded 25,582 loans in the third quarter, totaling approximately $6.8 billion UPB, which was comprised of $2.3 billion in direct-to-consumer and $4.5 billion in correspondent. Funded volume increased 80% quarter-over-quarter, while pull through adjusted volume increased 67% quarter-over-quarter to $7.5 billion.

 

 

		Quarter Ended
($ in millions)		Q3'24				Q2'24
Income before taxes		$	69			$	38
Accounting items			-				-
Pretax operating income excluding accounting items and other		$	69			$	38

 

		Quarter Ended
($ in millions)		Q3'24				Q2'24
Total pull through adjusted volume		$	7,491			$	4,473
Funded volume		$	6,825			$	3,794
Refinance recapture percentage			69	%			73	%
Recapture percentage			22	%			22	%
Purchase volume as a percentage of funded volume			69	%			62	%

 

Conference Call Webcast and Investor Presentation

The Company will host a conference call on October 23, 2024 at 10:00 A.M. Eastern Time. Preregistration for the call is now available in the Investor section of www.mrcoopergroup.com. Participants will receive a toll-free dial-in number and a unique registrant ID to be used for immediate call access. A simultaneous audio webcast of the conference call will be available under the investors section on www.mrcoopergroup.com.

 

Non-GAAP Financial Measures

The Company utilizes non-GAAP financial measures as the measures provide additional information to assist investors in understanding and assessing the Company’s and our business segments’ ongoing performance and financial results, as well as assessing our prospects for future performance. The adjusted operating financial measures facilitate a meaningful analysis and allow more accurate comparisons of our ongoing business operations because they exclude items that may not be indicative of or are unrelated to the Company’s and our business segments’ core operating performance, and are better measures for assessing trends in our underlying businesses. These notable items are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operational and planning decisions and evaluating the Company’s and our business segment’s ongoing performance. Pretax operating income (loss) in the servicing segment eliminates the effects of mark-to-market adjustments which primarily reflects unrealized gains or losses based on the changes in fair value measurements of MSRs and their related financing liabilities for which a fair value accounting election was made. These adjustments, which can be highly volatile and material due to changes in credit markets, are not necessarily reflective of the gains and losses that will ultimately be realized by the Company. Pretax operating income (loss) in each segment also eliminates, as applicable, transition and integration costs, gains (losses) on sales of fixed assets, certain settlement costs that are not considered normal operational matters, intangible amortization, change in equity method investments, fair value change in equity investments and other adjustments based on the facts and circumstances that would provide investors a supplemental means for evaluating the Company’s core operating performance. Return on tangible common equity (ROTCE) is computed by dividing net income by average tangible common equity (also known as tangible book value). Tangible common equity equals total stockholders’ equity less goodwill and intangible assets. Management believes that ROTCE is a useful financial measure because it measures the performance of a business consistently and enables investors and others to assess the Company’s use of equity. Tangible book value is defined as stockholders’ equity less goodwill and intangible assets. Our management believes tangible book value is useful to investors because it provides a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets.

 

 

Forward Looking Statements

Any statements in this release that are not historical or current facts are forward looking statements. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Results for any specified quarter are not necessarily indicative of the results that may be expected for the full year or any future period. Certain of these risks and uncertainties are described in the “Risk Factors” section of Mr. Cooper Group’s most recent annual reports and other required documents as filed with the SEC which are available at the SEC’s website at http://www.sec.gov. Mr. Cooper undertakes no obligation to publicly update or revise any forward-looking statement or any other financial information contained herein, and the statements made in this press release are current as of the date of this release only.

 

Investor Contact:

Kenneth Posner, SVP Strategic Planning and Investor Relations

(469) 426-3633

Shareholders@mrcooper.com

 

Media Contact:

Christen Reyenga, VP Corporate Communications

MediaRelations@mrcooper.com

 

 

Financial Tables

 

MR. COOPER GROUP INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(millions of dollars, except for earnings per share data)

 

		Three Months Ended September 30, 2024				Three Months Ended June 30, 2024
Revenues:
Service related, net		$	288			$	485
Net gain on mortgage loans held for sale			136				98
Total revenues			424				583
Total expenses:			335				300
Other (expense) income, net:
Interest income			227				189
Interest expense			(199	)			(187	)
Other expense, net			(5	)			(8	)
Total other expense, net			23				(6	)
Income before income tax expense			112				277
Income tax expense			32				73
Net income		$	80			$	204
Earnings per share:
Basic		$	1.24			$	3.16
Diluted		$	1.22			$	3.10
Weighted average shares of common stock outstanding (in millions):
Basic			64.3				64.6
Diluted			65.5				65.8

 

 

MR. COOPER GROUP INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(millions of dollars)

 

		September 30, 2024				June 30, 2024
Assets
Cash and cash equivalents		$	733			$	642
Restricted cash			186				162
Mortgage servicing rights at fair value			10,035				10,352
Advances and other receivables, net			940				934
Mortgage loans held for sale at fair value			1,962				1,539
Property and equipment, net			58				57
Deferred tax assets, net			315				351
Other assets			1,957				1,746
Total assets		$	16,186			$	15,783
Liabilities and Stockholders' Equity
Unsecured senior notes, net		$	4,885			$	4,141
Advance, warehouse and MSR facilities, net			4,379				4,925
Payables and other liabilities			1,841				1,684
MSR related liabilities - nonrecourse at fair value			443				439
Total liabilities			11,548				11,189
Total stockholders' equity			4,638				4,594
Total liabilities and stockholders' equity		$	16,186			$	15,783

 

 

UNAUDITED SEGMENT STATEMENT OF

OPERATIONS & EARNINGS RECONCILIATION

(millions of dollars, except for earnings per share data)

 

		Three Months Ended September 30, 2024
		Servicing				Originations				Corporate/ Other				Consolidated
Service related, net		$	246			$	24			$	18			$	288
Net gain on mortgage loans held for sale			10				126				-				136
Total revenues			256				150				18				424
Total expenses			180				83				72				335
Other income (expense), net:
Interest income			201				25				1				227
Interest expense			(100	)			(23	)			(76	)			(199	)
Other expense, net			-				-				(5	)			(5	)
Total other income (expense), net			101				2				(80	)			23
Pretax income (loss)		$	177			$	69			$	(134	)		$	112
Income tax expense															32
Net income														$	80
Earnings per share
Basic														$	1.24
Diluted														$	1.22
Non-GAAP Reconciliation:
Pretax income (loss)		$	177			$	69			$	(134	)		$	112
Other mark-to-market			126				-				-				126
Accounting items / other			-				-				6				6
Intangible amortization			2				-				-				2
Pretax operating income (loss)		$	305			$	69			$	(128	)		$	246
Income tax expense(1)															(60	)
Operating income														$	186
Operating ROTCE(2)															16.8	%
Average tangible book value (TBV)(3)														$	4,451

 

(1)

Assumes tax-rate of 24.2%.

(2)

Computed by dividing annualized earnings by average TBV.

(3)

Average of beginning TBV of $4,428 and ending TBV of $4,474.

 

 

 

UNAUDITED SEGMENT STATEMENT OF

OPERATIONS & EARNINGS RECONCILIATION

(millions of dollars, except for earnings per share data)

 

		Three Months Ended June 30, 2024
		Servicing				Originations				Corporate/ Other				Consolidated
Service related, net		$	446			$	19			$	20			$	485
Net gain on mortgage loans held for sale			10				88				-				98
Total revenues			456				107				20				583
Total expenses			171				69				60				300
Other income (expense), net:
Interest income			174				15				-				189
Interest expense			(105	)			(15	)			(67	)			(187	)
Other expense, net			-				-				(8	)			(8	)
Total other income (expense), net			69				-				(75	)			(6	)
Pretax income (loss)		$	354			$	38			$	(115	)		$	277
Income tax expense															73
Net income														$	204
Earnings per share
Basic														$	3.16
Diluted														$	3.10
Non-GAAP Reconciliation:
Pretax income (loss)		$	354			$	38			$	(115	)		$	277
Other mark-to-market			(68	)			-				-				(68	)
Accounting items / other			-				-				8				8
Intangible amortization			2				-				-				2
Pretax operating income (loss)		$	288			$	38			$	(107	)		$	219
Income tax expense															(53	)
Operating income(1)														$	166
Operating ROTCE(2)															15.3	%
Average tangible book value (TBV)(3)														$	4,333

 

(1)

Assumes tax-rate of 24.2%.

(2)

Computed by dividing annualized earnings by average TBV.

(3)

Average of beginning TBV of $4,238 and ending TBV of $4,428.

 

 

 

 

Non-GAAP Reconciliation:		Quarter Ended
($ in millions except value per share data)		Q3'24				Q2'24
Stockholders' equity (BV)		$	4,638			$	4,594
Goodwill			(141	)			(141	)
Intangible assets			(23	)			(25	)
Tangible book value (TBV)		$	4,474			$	4,428
Ending shares of common stock outstanding (in millions)			64.0				64.5
BV/share		$	72.49			$	71.24
TBV/share		$	69.93			$	68.67
Net income		$	80			$	204
ROCE(1)			6.9	%			18.1	%
Beginning stockholders’ equity		$	4,594			$	4,405
Ending stockholders’ equity		$	4,638			$	4,594
Average stockholders’ equity (BV)		$	4,616			$	4,500

 

(1)

Return on Common Equity (ROCE) is computed by dividing annualized earnings by average BV.

 

 

 

 

9

v3.24.3

Cover	Oct. 23, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 23, 2024
Entity File Number	001-14667
Entity Registrant Name	Mr. Cooper Group Inc.
Entity Central Index Key	0000933136
Entity Tax Identification Number	91-1653725
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	8950 Cypress Waters Blvd.
Entity Address, City or Town	Coppell
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75019
City Area Code	(469)
Local Phone Number	549-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	COOP
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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